OLCOTT V. THE SUPERVISORS, 83 U. S. 678 (1872)

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U.S. Supreme Court

Olcott v. The Supervisors, 83 U.S. 16 Wall. 678 678 (1872)

Olcott v. The Supervisors

83 U.S. (16 Wall.) 678


1. This Court will follow, as of obligation, the decisions of the state courts only on local questions peculiar to themselves, or on questions respecting the construction of their own constitution and laws.

2. Whether or not the construction and maintenance of a railroad owned by a corporation and constructed and maintained under a statute of a state authorizing such construction and maintenance is a matter in which the public has any interest of such a nature its to warrant taxation by a municipal division of the state in aid of it is not such a question. It is one of general law.

3. If a contract when made was valid under the constitution and laws of a state as they had been previously expounded by its judicial tribunals and as they were understood at the time, no subsequent action by the legislature or the judiciary will be regarded by this Court as establishing its invalidity.

4. A railroad is it public highway. Being so, and thus a road for public use, a state may impose a tax in furtherance of that use even though the road itself be built and owned by a private corporation.

5. An act of the Legislature of Illinois, authorizing a vote of the people of a particular county upon the question whether they would aid the building of a certain railroad, and if they voted in favor of aiding authorizing the issue of county orders for money to aid in the building, held, on an application of the principles just above stated to have been a proper exercise of legislative authority, and the county charged on such orders issued by it, and given to the road by way of donation.

Error to the Circuit Court for the Eastern District of Wisconsin, in which court Olcott sued the supervisors of the County of Fond du Lac, Michigan, upon certain county orders issued by the county February the 15, 1869, in pursuance of an Act of Assembly of the state approved on the 10th of April, 1867, and entitled

"An act to authorize the

Page 83 U. S. 679

County of Fond du Lac to aid the completion of the Sheboygan & Fond du Lac Railroad, and to aid the building of a railroad from the City of Fond du Lac to the City of Ripon."

This act authorized the people of the county to vote upon the question whether they would aid the building of the railroads named; and provided, in case the vote should be in favor of granting aid, that "county orders" should be issued as the roads should be completed. The sixth section of the act was thus:

"If, under the provisions of this act, the said County of Fond du Lac shall furnish the aid contemplated in this act, then the railroad companies, or their successors and assigns, shall transport wheat upon the said roads upon the following terms for ten years: wheat by the carload from the City of Fond du Lac, and from stations east thereof within the County of Fond du Lac, to the City of Sheboygan, at a price not exceeding five cents per bushel; and from the City of Ripon to the City of Sheboygan, at a price not exceeding seven cents per bushel; and from all stations between the Cities of Fond du Lac and Ripon to Sheboygan, at a rate pro rata with the freight from Fond du Lac to Sheboygan; and the companies or corporations owning and building the said roads, their successors and assigns, shall make such arrangements between themselves as shall give full effect to the provisions of this section, and the rates of freight above limited shall also apply to the companies owning or operating the said roads over and upon all other railroads where said companies respectively run their cars for the transportation of freight."

A vote was taken under the act, and was in favor of granting the aid. The county orders were accordingly issued in conformity with the act. They were all made payable to the Sheboygan & Fond du Lac Railroad Company, or bearer, and those now sued on had passed, bona fide, into the hands of Olcott.

In 1870, that is to say, subsequent to the issue of these orders, though prior to the trial of this case in the court below, the Supreme Court of the State of Wisconsin, in the

Page 83 U. S. 680

case of Whiting v. Fond du Lac County, [Footnote 1] held this act to be void, upon the ground that the building of a railroad, to be owned and worked by a corporation in the usual way, was not an object in which the public were interested, and therefore that the act in question was void, for the reason that it authorized the levy of a tax for a private and not a public purpose. The court there said:

"The question is as to the power of the legislature to raise money or to authorize it to be raised, by taxation, for the purpose of donating it to a private corporation. We held, in Curtis v. Whipple, [Footnote 2] that the legislature possessed no such power, and the conclusion in that case we think follows inevitably in this, from the principles stated in the opinion. The cases are not distinguishable, except in the single circumstance that the corporation here, to which it is proposed to give the money, is a railroad company in behalf of which the power of eminent domain has been exercised by the state for the purpose of enabling it to secure the land over which to build its road. . . . But though a railroad company may be, as to its capacity to assume and exercise in the name of the state the power of eminent domain delegated to it, so far a public or quasi-public corporation, yet in all its other powers, functions, and capacities it is essentially a private corporation, not distinguishable from any other of that name or character. . . . The road, with all its rolling stock, buildings, fixtures, and other property pertaining to it, is private property, owned, operated, and used by the company for the exclusive benefit and advantage of the stockholders. This constitutes a private corporation in the fullest sense of the term. . . . And if we examine any book of authority on the subject, [Footnote 3] we shall find that such is and always has been the rule of the law as to the corporate character of such companies, notwithstanding the delegation of power of eminent domain, and their consequent subjection in a certain degree to public use and convenience. They are always classed among private corporations, such as banking, insurance, and manufacturing corporations, and corporations for the building of bridges, turnpikes, canals &c. . . . Our conclusion, therefore, is that though a railroad

Page 83 U. S. 681

company may possess this single exceptional corporate characteristic, it is nevertheless essentially a private corporation, coming fully within the operation of the principles laid down in Curtis v. Whipple, and that the taxation complained of cannot be sustained."

The court below, in this case, held that decision to be binding upon the federal courts, and charged that the act under which the orders were issued was void. Judgment having gone accordingly it was now here for review.

It may here be mentioned that by the Constitution of Wisconsin, the legislature of the state has power to alter or repeal charters granted by it.

Page 83 U. S. 688

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